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Ebates.com links shoppers, store sites
Question of the Day
Google answers your questions in a fraction of a second. Facebook easily connects you with friends across the country. But shoppers hunting for bargains have had trouble finding what they want online. Until now.
Ebates.com is coupon clipping for the 21st century, a Web site that combines rebates and coupons with the ease and access of the Internet.
With only an e-mail address and a password, registered users of Ebates.com are connected to savings at more than 1,200 online stores. Bargains are available on clothing and computers, medicine and travel.
"We're trying to give shoppers what we think is the best deal possible for shopping online," said Kevin Johnson, chief executive officer of Ebates. Business is booming. He adds: "Frugality is the new chic."
After logging onto Ebates, a shopper can search for a product or choose from a selection of online stores. After the customer chooses a store's Web site and makes an online purchase, Ebates automatically credits the user's account for a cash-back rebate, which is a percentage of the sales price. At the end of each month, Ebates sends the shoppers a check for whatever cash they have racked up during their shopping.
Each store provides Ebates with a commission for sending it shoppers, and Ebates shares those earnings with the shopper. Each store designates what percentage it will pay back per purchase. Some of the stores offer as much as 26 percent back, though most are in the 3 percent to 5 percent range.
The stores benefit with more exposure to shoppers.
"Retailers are doing whatever they can to drive traffic into their stories," said Mike Kraus, a retail analyst for Allbusiness.com. "The media landscape is becoming more and more fragmented, in our busy lives where we are on our phone and watching TV and reading a newspaper at the same time, retailers are looking for any way possible to get their message in front of consumers."
Offering small discounts is much more cost effective than other marketing deals such as direct mail or advertising, Mr. Kraus said.
Ebates expects to pay $20 million back to its consumers this year and has paid about $40 million to $45 million in rebates since it was founded in 1998, Mr. Johnson said.
On average, Ebates users do not typify the $1 off orange juice coupon clipper. Most of its customers have higher incomes and tend to spend thousands of dollars shopping online each month.
The median income is $75,000, but 8 percent of Ebates shoppers are millionaires, Mr. Johnson said.
"These are shoppers who can afford to pay more but are smart enough not to," he added.
The average Ebates cash-back check is $120, but in July, Ebates wrote its largest check ever: $41,000.
When people realize the savings that can be obtained by simply shopping through Ebates, Mr. Johnson said, they tend to come back and tell their friends.
"What they really like is how careful and straightforward it is; they can e-mail us or get someone on the phone if they dont see their transaction tracked," he said.
Athena Reizakis, a finance consultant and self-professed shoe addict, attests to that phenomenon. Since she discovered Ebates in 2001, she has done as much of her shopping as possible through Ebates, buying clothing, office supplies, schoolbooks and even seeds for her garden. She estimates she has gotten back about $5,000 from Ebates over the years.
Now, she said, Ebates helps her determine where to shop.
"For travel, when you run a general search on Orbitz or Expedia, they all have the same general prices, but if you go through Ebates, youll get money back," she said. "I used to order textbooks when I was in law school, so I specifically chose stores that were on Ebates."
Customers like the ease and simplicity that come with the site; it requires no clipping, no memorization of codes. Everything is searchable, including products and coupons. Instead of searching the Internet independently for deals at specific stores, Ebates aggregates all discounts and deals for any product or vendor.
Ebates is not the only Web site connecting shoppers with discounts online. Upromise.com also offers cash back on purchase made at partner Web sites, restaurants and grocery stores. But instead of sending the cash directly to the shopper, the money is added to a tax-free college savings account or to pay off college loans.
Microsoft's search engine Bing enables shoppers to search for the best cash-back deals for a specific product on various sites.
"The idea is to give customers the best price and to bring them into a loyalty program like this by offering lower prices," said Sucharita Mulpuru, eBusiness analyst for Forrester Research. "It's not unlike a frequent-flier program for shoppers."
Ebates reaches out to shoppers on social-networking Web sites such as Twitter and Facebook. On Facebook, 6,000 have joined the Ebates fan page, and more than 1,000 people follow Ebates on Twitter, often sharing links or new deals with friends. Customer-service agents even interact with consumers via these social networks.
When Dorie Schneider posted on the Facebook fan page that she was not able to get a discount for Reef sandals at Shoes.com, Ebates responded in less than 24 hours on the page, suggesting she try Shoesteal.com.
"There, you'll find 20 percent off the entire site, and 4 percent cash back from Ebates. Use code STEAL. There are no brand exclusions as was the case with Shoes.com. Hope this helps!" said the post.
"We're moving toward this trend of everything being online, couponing included," Mr. Kraus said. "The younger kids wouldn't be caught dead clipping coupons and going through the checkout line."
But for those who prefer the traditional paper coupon, Ebates is beginning to cater to them, too. They offer a range of printable coupons, for stores including CompUSA and Lumber Liquidators. Mr. Johnson said they are hoping to expand to grocery stores in the near future.
As consumer spending in the U.S. increased modestly in July, up just 0.2 percent, according to the Commerce Department, Ebates saw a 60 percent increase in business.
"In tough times, people still look to spoil themselves: Lipstick is an affordable luxury, cosmetics are up this year," said Mr. Johnson. "Right when the recession started, we saw the increase in cosmetics and home decor, people doing nesting at home — not trading houses, but sprucing up their own homes instead."
Scoring a good deal on shopping is now a source of price, Mr. Kraus said.
"It's almost a game now to be able to tell people how much you saved. There's bragging rights associated with getting the best deal," he said.
Mr. Johnson said the stores also benefit from a relationship with Ebates. The conversion of shoppers from browsers to buyers happens more quickly for those coming from Ebates, as opposed to regular Web surfers, he said.
Ms. Mulpuru said stores such as Barnes & Noble and Saks Fifth Avenue will partner with Ebates or similar sites because it has "proven the ability to attract new customers to brands and to probably drive incremental dollars in sales from existing customers."
Ebates also has turned many of its users into Ebay.com shoppers and Netflix users through online partnerships.
During the worst months of the recession, Ebates did see a drop in the number of times a customer shopped per week, but recently that number is back up to normal, spurring Mr. Johnson to say, "The worst is over."
Although he is happy to see people shopping again, he said, he hopes the Web site will help encourage people to practice more responsible spending.
"I think were not going back to the overspending just for the sake of overspending," said Mr. Johnson. "We like the newfound frugality."
About the Author
Jillian Badanes presents the day’s top news stories in the daily “Morning Briefing” video. Check out the latest “Morning Briefing” here. Jillian graduated from The George Washington University’s School of Media and Public Affairs with a major in Journalism and Mass Communication and a minor in International Politics. She spent her early years in London, England and Connecticut before ...
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